As the number of lawsuits filed in local and state courts to collect upon defaulted financial obligations grows steadily year-to-year, so too do the prosecutions of such collection suits on the basis that the same violate the Fair Debt Collection Practices Act's (FDCPA) prohibition on false and misleading debt collection practices. Traditionally, the court system has provided an opportunity for individuals and entities alike to resolve disputes. Indeed, as stated in Bill Johnson's Restaurants, Inc. v. NLRB, 461 U.S. 731, 741, 103 S. Ct. 2161, 76 L. Ed. 2d 277 (1983), "the right of access to the courts is an aspect of the First Amendment right to petition the Government for redress of grievances." To be certain, such access to the courts does not entitle such petitioner to pursue baseless, improper, and harassing litigation, or otherwise exploit the justice system. As such, protections are in place to prevent and address any untoward litigation, including the pursuit of a lawsuit's proponent for abusive practices. The FDCPA has been relied upon and applied in these circumstances to address abusive litigation in the collection of debt. But is it possible that the oversight of the FDCPA, as applied to collection litigation, may infringe upon a creditor's access to the courts and the right to have its disputes determined on the merits by the proper court of jurisdiction?
Frustrated with "abundant evidence of the use of abusive, deceptive and unfair debt collection practices by many debt collectors," Congress enacted the FDCPA in 1977 "to eliminate abusive debt collection practices by debt collectors" (15 U.S.C. § 1692), and ever since, consumer-oriented plaintiffs' attorneys have policed the debt collection process, sometimes to bring about positive change within the collection industry and other times in "an effort to grasp the brass ring of attorneys' fees that are awardable to successful plaintiffs under the Act." Rodriguez v. Blatt, Hasenmiller, Leibsker & Moore, LLC, 2009 U.S. Dist. LEXIS 23044, *10 (N.D. Ill. March 10, 2009). Long gone are the days of the blatantly abusive debt collection practice, the use of which is is synonymous with "soon-to-be sued." Nowadays, a creditor's every "communication" (see 15 U.S.C. § 1692(a)(2)) is ardently examined to ensure that what is said, and similarly, what isn't said, will not mislead the "least sophisticated consumer."
Likewise, once the FDCPA no longer provided a safe haven for lawyers, and documents filed to begin the legal process and initiate collection lawsuits, i.e., a complaint, constituted communications regulated against abusive practices, litigation practices became scrutinized for false and deceptive conduct associated with the general collection action.
Nothing has been more closely scrutinized through the lens of the FDCPA than the documentation relied upon by collection actions pursued upon legally collectible debts, including affidavits attesting to the validity of the complaint's subject matter. Initially, the claims were aimed at what evidence of a particular debt was attached to a debt collection complaint, as well as available to the debt's creditor at the time of suit. However, numerous courts have held that failure to attach proper documentation required to substantiate a claim to a complaint at the time of filing is not a violation of the FDCPA. The reasoning for denying relief upon such allegations was that state rules of procedure, not federal law, should determine pleading requirements. Next, focus and scrutiny shifted to the content of the pleading, and specifically, the affidavits employed by creditors in the pursuit of debt.
From the perspective of the creditor, a properly executed affidavit ensures that the particulars of the debt such as balance, date of default, interest rate, and whom it is owed by are properly represented, as once a complaint is filed it represents the debt collector's last opportunity to comply with the FDCPA. Also, many debt collection suits end in a default judgment being entered against the consumer who fails to respond to the litigation. Thus, the proper affidavit provides a court with the validation it needs that a debt in a particular amount is properly the responsibility of the absentee defendant against whom the litigation has been brought prior to entering judgment in the creditor's favor.
In its simplest sense, an affidavit can be viewed as an offer of proof, a representation by its proponent that if called to testify, the affiant would offer certain testimony related to establishing the propriety of the alleged debt as it relates to the consumer being sued. A consistent challenge to the use of the affidavit as a source of validation for the underlying debt in collection actions is that the same is false and misleading, in a material sense, because of the affiant's reliance on the business records of the original creditor who had assigned the defaulted account to the affidavit's proponent. In essence, although everything about the debt as reflected in the affidavit is true, the affidavit still misleads because the affiant's statements therein, and any live testimony and documents similarly produced as to the validity of the debt, would be based upon and represent the records of the original creditor, which cannot be authenticated by the assignee's affiant; thus any testimony about or production of same would be barred as hearsay.
Consider this challenge to affidavits, however, with the language of F.R.E. 806(3), wherein business records created by or from information transmitted by someone with knowledge are not excluded as hearsay, as well as the established principle of business compulsion. As summarized by the court in Krawczyk v. Centurion Capital Corp., 2009 U.S. Dist. LEXIS 12204 (N.D. Ill. Feb. 18, 2009) (internal citations omitted):
As recognized by the Massachusetts Supreme Judicial Court in Beal Bank, SSB v. Eurich, '[t]he problem of proving a debt that has been assigned several times is of great importance to mortgage lenders and financial institutions.' Given the common practice of financial institutions buying and selling loans, the court in Beal determined that it is normal business practice to maintain accurate business records regarding such loans and to provide them to those acquiring the loan. The court concluded that the bank was not required to provide testimony from a witness with personal knowledge regarding the maintenance of the predecessors' business records because the bank's reliance on this type of record keeping by others rendered the records the equivalent of the bank's own records. The Beal court also stated that 'to hold otherwise would severely impair the ability of assignees of debt to collect the debt due because the assignee's business records of the debt are necessarily premised on the payment records of its predecessors.'
Not only then are affidavits purporting to rely upon a predecessor's records, incorporated into one's own business records as a matter of course and custom, not hearsay, but furthermore, admissibility of testimony and evidence is historically a matter for the courts in which an action is pursued (F.R.E 104) and will be reviewed in the instance of an appeal using an abuse of discretion standard.
Challenges to collection actions pursued in state court along this vein would have the federal court system determine procedural and evidentiary issues related to collection litigation, that otherwise present no false or misleading conduct, which may be better left to the individual state court's deference. However, considering that whether or not a particular witness is permitted to testify, and upon what subject matter, is within the trial court's discretion, a representation in an affidavit by its affiant that he or she has particular knowledge of certain subject matter, based upon review of records, including those from another entity, presumably then should not be per se false or misleading merely because a court may choose to exclude such testimony.
Furthermore, direct challenges to the content of an affidavit as false and misleading, in violation of the FDCPA as it relates to its representation of the validity of the debt, would seemingly usurp the state court's function as finder of fact as well. The fact that a witness may be permitted to testify and certain evidence may be admitted pursuant to F.R.E. 803(6), does not mean then that the day is automatically won. Admissibility is one determination; what weight to give testimony or evidence, if any weight at all, is something entirely different.
Consider 3d Circuit Model Civil Jury Instruction 1.7 related to the Credibility of Witnesses, which states:
In deciding what the facts are, you may have to decide what testimony you believe and what testimony you do not believe. You are the sole judges of the credibility of the witnesses. Credibility means whether a witness is worthy of belief. You may believe everything a witness says or only part of it or none of it.
as well as 3d Circuit Model Civil Jury Instruction 1.5 related to Evidence, which states:
You must make your decision based only on the evidence that you see and hear in court. Do not let rumors, suspicions, or anything else that you may see or hear outside of court influence your decision in any way.
You should use your common sense in weighing the evidence. Consider it in light of your everyday experience with people and events, and give it whatever weight you believe it deserves. If your experience tells you that certain evidence reasonably leads to a conclusion, you are free to reach that conclusion.
It would seem then that the truthfulness of an affidavit, or similarly, the testimony of the affiant, is a determination for the finder of fact to make in light of all other evidence presented, as opposed to a federal court reviewing the same under the filter of the FDCPA. Applying this analysis, the fact that a particular affidavit or other evidence offered as proof of an alleged debt in a state court collection action fails to secure judgment in the creditor's favor should not then automatically trigger an FDCPA violation as being false or misleading. With this consideration in mind, courts such as Hemmingsen v. Messerli & Kramer, P.A., 674 F.3d 814 (8th Cir. Minn. 2012), have held that "a debt collector's fact allegations are not false and misleading for purposes of [FDCPA] when rejected as not adequately supported" in a state court collection litigation.
Many courts have recognized requests to infringe upon a state court's right to police its own matters and have denied acting upon such opportunity. In Rosales v. Unifund CCR, 2008 U.S. Dist. LEXIS 98464 (N.D. Ill. Dec. 5, 2008), Rosales argued that an affidavit attached to a state court collection action which professed to be based upon personal knowledge was false, and thus a violation of the FDCPA. Unifund argued that this challenge to the affidavit was properly described as alleging that "the affidavits are procedurally defective rather than containing false statements about debt and involve state law evidentiary issues." The court declined to find a cause of action, holding instead that, whether false or not, "the alleged deficiencies in the Kenney Affidavits submitted in the state court proceedings relate to state court pleading requirements rather than the overarching policy concerns behind the FDCPA."
Similarly, in Hill v. Midland Funding, LLC, 2013 U.S. Dist. LEXIS 53963 (D. Md. Apr. 16, 2013), Hill challenged an affidavit, alleging that the affidavit would be insufficient to allow for the court to grant judgment in Midland's favor and thus was false and misleading. The court disagreed, holding that an affidavit does not violate the FDCPA merely because it may be insufficient to win the day in state court.
There is a line which becomes blurred by the pursuit of protection for the least sophisticated consumer from abusive debt collection lawsuits, whereby the merits of a collection action are litigated through challenges to its evidentiary support as an FDCPA action, as opposed to in the state court forum where determinations on admissibility and credibility historically belong. What must be remembered however is the least sophisticated consumer is not alone when it comes to judicial action, as opposed to independent dealings with creditors. "Where an attorney is interposed as an intermediary between a debt collector and a consumer, we assume the attorney, rather than the FDCPA, will protect the consumer from a debt collector's fraudulent or harassing behavior . . . the protective purposes of the FDCPA typically are not implicated when a debtor is instead protected by the court system and its officers." Gabriele v. Am. Home Mortg. Servicing, 2012 U.S. App. LEXIS 24478, 13-14 (2d Cir. 2012).